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Despite the ongoing retreat in the cryptocurrency market, most digital assets have generated exponential wealth for investors over the past two years. For example, Dot pattern (CRYPTO:DOT) has gained over 500% in market value since August 2020 Terra (CRYPTO:LUNA) is up a staggering 18,000% over this period. However, the price of XRP (CRYPTO:XRP) is well below its record highs that were broken in early 2018.
The XRP token is the native cryptocurrency of Ripple, a payment system introduced by Ripple Labs. In addition, RippleNet is a network used by financial institutions to transfer funds at a lower cost compared to legacy systems.
In addition, RippleX offers blockchain solutions for projects aimed at providing payment services. So companies can use the RippleX platform instead of building their own decentralized applications.
While XRP is one of the largest cryptocurrencies in the world, Ripple is in the midst of a legal battle with the Securities and Exchange Commission, resulting in the token’s tepid performance over the past 15 months. Let’s see why Polkadot and Terra are better bets than XRP right now.
Dot pattern
As an open source sharded multichain protocol, Polkadot is also the 13th largest cryptocurrency in the world with a value of $17.6 billion by market cap. It connects a network of blockchains, enabling the cross-chain transfer of data, tokens, and assets.
Polkadot essentially focuses on interoperability between blockchain networks, which is also the basis of Web 3, or a decentralized internet.
As a sharding multichain network, Polkadot can process transactions on multiple chains simultaneously, known as parachains. This feature improves scalability quickly.
Terra
Valued at $30 billion by market cap, Terra is currently the ninth largest cryptocurrency in the world. Terra is a blockchain protocol that uses stablecoins to reduce volatility and power global payment systems. In fact, Terra aims to integrate the stability of fiat currencies with the decentralized features of Bitcoin to build a fast and affordable settlement system.
The Polkadot and Terra ecosystems are working together to expand the stablecoin market
Acala is a decentralized finance network powering the aUSD ecosystem. The aUSD is Polkadot’s decentralized stablecoin and is backed by cross-chain assets.
Similarly, Anchor is a DeFi (decentralized finance) protocol that is part of the Terra ecosystem. Here, income-seeking crypto investors can mortgage stablecoins on Anchor and earn a 19.5% annual return. Since deposits are in the form of the UST stablecoin, volatility is significantly reduced.
Earlier this week, Acala announced that it will be working with Anchor to expand the use of stablecoins through integrations that will span the Polkadot and Terra ecosystems. As such, Acala and Karura, the former’s Kusama-based parachain, will help expand Anchor’s collateral options for UST with Liquid DOT (LDOT) and Liquid KSM (LKSM), which in turn are Acala’s high-yield staking derivatives.
Acala and Terra will also work together to enhance the aUSD and UST liquidity pools on Acala and provide UST holders with access to Polkadot. The initial integrations will be used as a foundation for building additional integrations and deployments between Terra and Acala.
kusama and Polkadot users can access Anchor through the LKSM and LDOT derivatives. According to the press release, “While enjoying the returns on stubped DOT (about 14%) and staked KSM tokens (about 20%), Acala and Karura users can leverage their liquid staking assets via cross-chain collateralization to access additional Income access to anchor.”
For example, a cryptocurrency investor can stake their LSM on Karura and earn an APY of 20% and receive liquid LKSM tokens that can be sent to Anchor to borrow UST, bringing additional returns.
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